As Winnebago Leads, Thor Follows

Midway through the summer driving season, signs of the U.S. recovery go by in a blur as vacationers ply the byways either driving or towing proud new recreational vehicles.

Shipments of motor homes jumped more than 30% this year through May vs. the same period in 2012, according to the Recreation Vehicle Industry Association. Shipments of comparatively less expensive travel trailers rose 11%. Trailers make up a bigger slice of the RV fleet, with sales of 128,037 through May vs. just over 15,000 motor homes.

Most of the units are being bought by dealers to place in inventory, rather than sales to the final owner. Still, the rise in confidence is a welcome change after the industry rolled over early and hard when the economy tumbled. RV sales fell off nearly 50% from peak to trough.

One of Winnebago's Minnie towable RVs displayed in Lexington, Ky. Motor homes, a smaller piece of the market, lead the industry's rebound. View Enlarged Image

The industry is particularly sensitive to factors such as consumer discretionary spending and rising fuel prices. It "rolled over" before housing and other sectors, and "was in an all-out free fall" by 2006, said Kathryn Thompson, CEO of Thompson Research Group.

"This industry is about as discretionary as you can get," Thompson said.

Pent-Up Demand

The RV industry started upshifting somewhat in 2010. Sales accelerated in the second half of last year.

"People who hadn't bought anything are now replacing (aging RVs)," he said.

Much of that rebound is due to increasing consumer confidence, buoyed by rising home prices and the stock market's advance to new highs.

Winnebago (WGO) is the leading manufacturer of bus-sized Class A motor homes. Its sales rose 35% or more over the past three quarters.

Thor (THO) leads the market in towables. Its sales surged 30% in its fiscal first quarter, which ended in October, but slowed to a 13% gain in the April quarter. Drew Industries (DW) supplies slide-out mechanisms and other RV components. It saw sales jump 36% in its September quarter, then slow to 13% growth for the quarter ended in March.

The three are the largest companies in IBD's Building - Mobile/Manufactured Homes & RV group. The highly cyclical group on Friday ranked No. 58 out of 197 industries tracked by IBD, up from No. 171 at the start of May.

The group also includes modular-home manufacturer Cavco Industries (CVCO) and Patrick Industries (PATK), maker of wall and ceiling panels for RVs and manufactured homes.

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03/26/2015 01:41 PM ET

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